QUESTION: Mr. Armstrong, you obviously have a database on Italy that is without comparison. Nobody else even had a chart on the Italian lira you recently published on the blog. I know you are well aware of the revolutions in Italy and the history. I was wondering do you have any forecast for the next revolution? It seems that the five-star movement may perhaps be the beginning. Any hint about the future?
ANSWER: Well to give you a target year where it can begin will be 2021. The Five-Star Movement is indeed the prelude. However, the attempt to stay in the Eurozone will be the undoing of Italy. The most threatening issue in Italy that will lead to revolution is most likely an attempt to raise inheritance taxes as being suggested by Brussels.
Culturally, Italy has the lowest inheritance tax in all of Europe. The German inheritance tax rates range from 17% to 50%, depending on your relationship to the decedent. In Italy, the Italian Inheritance Tax (Imposta sulle Successioni) is applied to all the assets worldwide belonging to the deceased if the person is a resident of Italy ONLY. If the person lives outside of Italy, then the tax is applied ONLY to assets in Italy. Where everyone else has generally inheritance taxes of 15% or higher for the immediate family, Italy that rate is just 4%. Here is the breakdown:
- 4% to be paid for transfers to the surviving spouse and children, with an exemption of Euro 1,000,000 for each beneficiary
- 6% to be paid for transfers to brother and sisters of the deceased, with an exemption of Euro 100,000 for each beneficiary
- 6% to be paid for transfers to relatives within the fourth degree of relationship to the Deceased, and other relatives on the spouse side up to the third degree (no exempt amount is available)
- 8% to be paid for transfers to any other (unrelated) parties.
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